Brokers Requesting Earnest Money Deposit

I get the sense there has been a decline in buyer quality over past several years. A number of deals we've looked at have come back to market because SBA buyers can't close (frequently because they accept unreasonable ask prices and the bank says 'no'). The "EMD" seems to be one way some parties have reacted. Does the idea come from RE? Whatever the case, aren't there better ways to assess a buyer's ability to close and secure financing (e.g. personal financial statements and track record)?

Buyers already incur significant costs during diligence. If the purpose is "skin in the game", why don't DD costs satisfy that?

Taking it a step farther, here's a radical idea: What skin in the game does the seller have? Sure they've lost some time, but what does the seller lose if they break the deal? If a party should make an EMD, why wouldn't it be the seller? I know there are some deals we did not pursue because we didn't believe the sellers were serious/committed.

For deals 5mm and below, there should be a EMD held with the closing agent. A buyer can back out for pretty much any reason during DD so the EMD is not in jeopardy. Now does this happen all the time, no. That said, a smart seller/broker would request one on these size deals. If they buyer does not wish to put any skin in the game, the seller should move on. As a seller, why in the world would he take his business off the market and make it exclusive for a buyer or buying group that will not put up a deposit. I have a buddy on a bigger deal 5.8mm with one of these buying groups and they have no deposit in the deal (my buddy's fault for sure), it has been almost a year, there is still no purchase agreement and they are jerking the seller around hard but here they are with no skin in the game whatsoever. (buying group unnamed). The problem is the timing. Most brokers will give you just enough info to make a decision on offering an LOI or PA. Only then does the deal go into due diligence. However, to the brokers defense, if they didn't do it this way, they would spend their entire day doing DD requests for buyers who can't buy/don't buy/or won't buy. It's a catch 22. So since it's the buyer that is requesting things (confidential information) from the seller, it should be the buyer offering some skin in the game. If they don't like what they see in DD, walk from the deal and get your deposit back. No harm no foul.